Shares up led by blue chip gains

Shares up led by blue chip gains

Dow Jones/Jakarta

Indonesian shares ended higher on Tuesday led by bargain- hunting in telecommunication blue chips after the main index fell in the previous three sessions, dealers said.

They said gains on several Asian markets improved local sentiment, but concerns about interest rates kept overall sentiment cautious.

The central bank on Tuesday raised its Bank Indonesia Rate to 8.75 percent from 8.50 percent to cope with rising inflation.

"The interest rate move spurred investors to continue offloading shares that are sensitive to the interest rate movement," said a trader with a foreign securities firm.

The Jakarta Stock Exchange's Composite Index rose 0.4 percent, or 4.213 points, to 1162.799.

Gainers led decliners 56 to 38, with 76 stocks unchanged. Volume fell to 1.25 billion shares valued at Rp 1.1 trillion, compared with 1.4 billion shares worth Rp 1.25 trillion on Monday.

Indonesian Satellite Corp. gained 4.6 percent to Rp 5,750 and rival Telekomunikasi Indonesia rose 0.9 percent to Rp 5,400 on a rebound after falling in the previous three sessions.

Dealers said investors continued to buy several mining blue chips that have solid fundamentals and a bright outlook.

Coal miner Tambang Batubara Bukit Asam rose 6 percent to Rp 1,780 and nickel miner International Nickel Indonesia added 2 percent to Rp 15,600 on expectations of improved 2005 earnings due to higher commodity prices.

On the downside, automotive company Astra International succumbed to selling pressure on expectations of lower 2005 sales as the high interest rate could dissuade people from buying cars through bank loans.

Astra lost 0.9 percent to Rp 11,700.

Elsewhere, heavy equipment company United Tractors dropped 3.8 percent to Rp 4,400 on profit-taking after sharp gains last week.

Dealers said they expect Indonesian shares to trade slightly higher on Wednesday led by a further rebound in telecommunication blue chips.

The Indonesian rupiah closed lower on Tuesday due to onshore dollar demand and an absence of offshore dollar-selling, with on Tuesday being a National Day holiday in neighboring Singapore, dealers said.

The dollar closed at Rp 9,795 compared with Rp 9,772 on Monday. The dollar rose to an intraday high of Rp 9,800.

Domestic dollar demand on behalf of Singapore's United Overseas Bank was a significant factor that weighed the rupiah down, a dealer at a foreign bank said, without elaborating.

Dealers said the currency market didn't react to a decision earlier Tuesday by Bank Indonesia to raise its benchmark rate to 8.75 percent from 8.50 percent to contain inflationary pressures.

"The rate hike was quite expected," a dealer said.

Dealers said that local corporate are likely to maintain their "healthy" appetite for dollars in the remainder of the week to service overseas debt obligations.

"We'll likely see spot trading in a narrow range in the days ahead, but the dollar could go higher," a dealer said.

The dollar will likely trade Wednesday between Rp 9,780 and Rp 9,820, dealers said.